Cross-Border Insolvency and Corporate Restructuring in the Post-Pandemic Era: Convergence, Coordination, and the Future of Global Insolvency Governance

The growth and integration of the world economy have increased both the size and complexity of corporate bankruptcy cases that cross borders, causing continued pressure on current frameworks for reorganizing corporations by nation. The COVID-19 pandemic acted as a systemic stress test for the transnational system of reorganizing corporations used in different countries, revealing the fragmentation between different systems and creating greater need for coordinated responses to corporate bankruptcy events. This article examines whether there has been convergence to a common approach to cross-border insolvency, namely, modified universalism, as a result of the pandemic. The study uses both doctrinal and comparative analyses of various international commercial law frameworks, including those developed by the UN Commission on International Trade Law (UNCITRAL) (including the UNCITRAL Model Law), regional bankruptcy statutes (such as the EU Insolvency Regulation), and domestic bankruptcy statutes (such as Chapter 15 of the US Bankruptcy Code). In particular, the article examines the legal framework in India for reorganizing corporations under the Insolvency and Bankruptcy Code of 2016 and the likely reforms to that framework over time. The article concludes that while modified universalism continues to provide the predominant standard for corporate bankruptcy resolutions, significant structural inequalities, restrictions on state sovereignty, and exceptions for public policy, among other factors, inhibit the total harmonization of the various cross-border bankruptcy laws. However, innovations in judicial cooperation and collaboration among multinational affiliated companies during the pandemic may support additional movement toward a cohesive framework for coordinating cross-border bankruptcies.